Monday, 28 December 2015

It is form 1099 season again and there are tax payers looking for the correct steps on how to file form 1099? If you happen to be in business, then it is necessary for you to pay good attention to the issuance of these forms and failing to do so will have you facing penalties. This burden on businesses seems to grow every year. There are even cost basis required on some 1099 forms these days. However, the real award is receiving the federal 1099 form. Since the IRS receives a copy of this form, it serves as an important piece of information that needs to be handled carefully as it can cost big for an individual. There are a lot of people who do not like these forms but there are some important mistakes that need to be avoided when filing these forms.

Do not Forget to Check Your Mail

There are a lot of people who take care about the W-2 forms because they are attached to their tax returns highlighting wages and the taxes withheld. However, people tend to be very careless about form 1099. This is something that needs to be avoided. Each 1099 form should be watched out for. This is because these forms are matched to the Social Security Number of an individual and an individual is guaranteed an audit if he or she fails to report these forms.

Do Not Forget About Address Changes

In spite of the fact that the issuer of the form possesses an individual’s old address, information gets delivered to the IRS depending on the Social Security Number of an individual. Therefore, it is important for people to make sure that their correct addresses have been provided so that they can receive a copy of these forms easily and conveniently. Address changes need to be updated directly with the payers along with putting a forward order with the US Post Office. It is important for you to see every form that the IRS sees.

Beware of Errors

Deadline for filing federal 1099 form is 31st January each year. The payer; however, has time till the end of February to send the copies of the form to the IRS. There are many payers who send the forms to the taxpayers and even to the IRS simultaneously. However, there are others who make use of a delay of 30 days. This delay actually means that the tax payer has got chances of correcting certain errors in the form. It is necessary for the tax payers to go through the forms immediately instead of just piling them up.

Do Not Lose the Forms

As soon as the form is received, it needs to be opened and checked. The forms need to be kept in a safe place because they might be required while doing tax returns. Some individual take the services of a tax preparer and in this case they need to provide copies of each form that they receive to the tax return preparers. This is how to file form 1099.

Wednesday, 14 October 2015

Taxpayers
are not very fond of receiving IRS Form
1099. On the other hand businesses might also not like sending these forms
out. In fact, it can rightly be said that there is not a single individual who
likes Form 1099 with IRS being an exception. The IRS or Internal Revenue
Service simply loves the 1099s because these forms make way for data matching
against the tax returns. Some of the most important things that you should know
in regard to Form 1099 prior to filing your taxes are as follows:

It is better to give the Form
rather than Receiving it

Usually,
businesses bear the responsibility of issuing the 1099s to payees receiving
minimum $600 during a year. However, this is just a basic rule and there are
several exceptions to this rule. This is the reason why individuals get form
1099 for almost every bank account that they might be maintaining. This goes
even for the people who earn not more than $10 of interest income.

Many Varieties are Available

There
are different varieties available in the category of IRS Form 1099. There is 1099-DIV for dividends, form 1099-INT for
interest, form 1099-R for payouts from individual retirement accounts and
pensions, form 1099-G for unemployment benefits and local and state tax
refunds, form 1099-S for real estate transactions and form 1099-B for barter
exchanges and broker transactions. In fact, it would be right to say that there
is a dizzying assortment available. You might come across different categories.
However, remember that Form 1099-MISC standing for Miscellaneous is quite
prompt. It covers a huge territory and the largest number of questions are also
included in this type of form 1099.

Timing is Important

It
is important for businesses to send out the IRS Form 1099 to their employees by 31st January against
the previous calendar year. Nevertheless, if you do not receive form 1099, you
must not assume that you do not have the responsibility of reporting your
income. You must report your income even if you do not receive form 1099 by
February or March. Companies should remain aware of the fact that they would
have to pay penalties if they issue the 1099s late.

Beware of Changed Addresses

Change
of address information will genuinely be reported to the IRS depending on the
Social Security Number of an individual despite the fact that you receive form1099 or not. It is your duty to update your changed address with the payers
directly. You also need to carry out the responsibility of placing a kind of
forwarding order with US Post Office.

IRS also Receives Form 1099

You
might be well aware of the fact that any form 1099 that you receive is also
sent to the IRS. Deadline for mailing the forms to taxpayers is 31st
January. However, the tax payers have time till March to submit all the
completed 1099s to the Internal Revenue Service.

Wednesday, 1 April 2015

Now we can see that how a failure of timely file of individual income tax returns on time even beyond the extended time of request through IRS form 4868 may result in a penalty called “Failure to Timely File Penalty” which come through section 27 of Code of Federal regulations (CFR) 24.274-Failure to timely pay tax or file a return.

By this CFR in force, the penalties for failure to pay tax at the time required, for willful refusal to pay the tax as per section 27 and for fraudulent nonpayment of tax are provided for in 26 U.S.C. 5661 and 6656. In addition to these penalties, there is a penalty for the delinquent filing of a tax return, imposed as an addition to the tax shown on the return, amounting to five percent for each month or fraction thereof of the minor crime or neglect of one’s duty, not exceeding 25 percent in the aggregate, unless it is shown that the neglect of one’s duty is due to reasonable cause and not to willful neglect.

However in the case of individual or as common income tax filers, the fraudulent non-payment may not occur as presumed unless or otherwise those involved in spirits trade like wine, where-in this section 26 U.S.C. 5661 and 6656 as stated as whoever, with intent to defraud the United States, fails to pay any tax imposed upon wine or violates, or fails to comply with, any provision of subchapters of USA laws, or regulations issued pursuant thereto, or recovers or attempts to recover any spirits from wine, shall be fined not more than $5,000, or imprisoned not more than 5 years, or both, for each such offense, and all products and materials used in any such violation shall be forfeited to the United States.

This also includes other offenses as punishable and the law states-Any proprietor of premises subject to the provisions of subchapter of US law, or any employee or agent of such proprietor, or any other person, who otherwise than with intent to defraud the United States violates or fails to comply with any provision of subchapter or subpart of part I of subchapter A of US law, or regulations issued pursuant thereto, or who aids or abets in any such violation, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense.

Here one should not get misconstrued about the subject as present in this blog but it is always about that whoever as an individual who need to submit the income tax returns to IRS within the prescribed time as April 15th of 2015 should be dutiful. Whatever tax as figured by such individuals if could not be paid can be deferred through request of IRS form 4868 and this may only extend time for payment and not time to pay tax as one have to pay truly to IRS.IRS will include interest payment along with figured tax dues. But when one tries to postpone the tax payments with interest even beyond the extension time of 6 months as given by IRS form 4868 then may violating the IRS law to call for undue penalty should be understood.

Monday, 23 February 2015

In this section, the civil penalties like when one does not
file the tax but having paid the taxes by due date will also attract a penalty.
In case if a person substantially understate his or her tax, or file an
irresponsible tax return like frivolous return, or failing to provide the
SSN-Social Security Number will also suffer by the penalties of IRS. The civil
fraud penalty will apply and payable by persons who provide dishonest or
unlawful information.

The failure-to-file penalty may be applied to persons when
they do not file tax return by due date including and even after utilizing the
credit period through extension forms, this penalty amount is calculated at 5%
for each month or part of a month based on the delay or lapse period of tax
return however treated as late. The
maximum penalty chargeable by IRS is not more than 25%.

When a person is found that the failure to file tax returns
is due to his fraud or being unethical, the penalty will be charged as 15% for
each month or part of a month based on the lapse period of tax return but
however treated as late and the maximum penalty chargeable by IRS may be 75%.

When the tax return was delayed by more than 60 days even
after the due date or including the extended due date as per extension forms,
the IRS minimum penalty will be smaller of $100 or 100% of the unpaid tax. If
the reasonable cause is justifiable to IRS that that the filing and paying
delay of tax was due to genuine reasons and not because of will full neglect,
then one is forgiven and do not have to pay the penalty.

Src: Flickr

One has to pay the failure-to-pay penalty of 1/2 of 1% of
one’s unpaid tax for each month, or part of a month, after the due date that
the tax is not paid. This penalty does not apply during the extension period
available by filing Form 4868, Application for Automatic Extension of Time To
File U.S. Individual Income Tax Return, if one has paid at least 90% of his/her
actual tax liability before the original due date of your return through
withholding on wages, estimated tax payments, or a payment sent in with IRS
Form 4868. If a notice of intent to levy is issued, the rate will increase to
1% at the start of the first month beginning at least 10 days after the day
that the notice is issued.

If a notice and demand for immediate payment is
issued, the rate will increase to 1% at the start of the first month beginning
after the day that the notice and demand is issued. This penalty cannot be more
than 25% of his/her unpaid tax. One will not have to pay the penalty if they
can show that he/she had a good reason for not paying their tax on time. This
failure-to-pay penalty is added to interest charges on late payments.

The Combined penalties are that if both the failure-to-file
penalty and the failure-to-pay penalty apply in any month, the 5% (or 15%)
failure-to-file penalty is reduced by the failure-to-pay penalty. However, if a person file his/her tax return as delayed
for more than 60 days after the due date or extended due date, the minimum
penalty is the smaller of $100 or 100% of the unpaid tax.

IRS wants to be just and even so as to be reasonable to
taxpayers despite their various shortcomings as shown in these chapters and so
it is always better to avoid the penalties than overcoming it. Please visit IRS
certified and authorized tax service partner http://www.Etax4868.com
for queries relating form 4868.

Monday, 5 January 2015

IRS is here in the USA to do the rightful, purposeful, and
dutiful job of tax collections for different IRS forms and one such form is
1099-MISC structured for reporting tax return for miscellaneous income and
which has been normally received by millions of people across the US who are as
self-employed, as independent contractors, entrepreneurs, and self-styled
practitioners. This continues day after day for which IRS structured this form
1099-MISC exclusively for people who do services as consultants under
part-time, unlike the employees who work in full-time to file w-2 forms.

It is
obvious that IRS ensures that people pay taxes both direct and indirect means
and collects the taxes owed.IRS do this by co-ordination as matching the
1099-MISC form as they received from your client with the one you have received.
It is something like a background information that IRS has a proof from your
client that you have already received payments from him for the services and
hence it is unavoidable that you owe tax to IRS through form 1099-MISC.
Especially with IRS form 1009-MISC the independent contractors and consultants
as service providers have to be careful and it is like a blade with two sharp
edges and inescapable.

As an independent contractor, consultant, entrepreneur, everyone
will get a 1099-MISC form from the companies they provided necessary and
required services for - as long as the payments were at least $600 for the
prior year. Now, if they did not get anything in the mail, then they should
contact their respective clients and request for the form 1099-MISC. Yes, there
can be times when the form can get lost or sent to the wrong address or, the
clients may have taken up their own time which becomes been late or did not
even realize a form needed to be sent out! To help along with the process, as
independent contractors, consultants, one should also send over a completed W-9
form.

And further what if the client still does not send the
1099-MISC forms? Well, Independent contractors still need to report the income
and also simultaneously notify the IRS. Often there are enough chances in
accounting of your bills being overlooked, Independent contractor should report
any gross income earned even if it’s under the $600 threshold.

When an Independent contractor starts to receive the
1099-MISC forms, he can start the process of putting all bills and figures together
to work for your tax return. It is needed for many independent contractors to
fill-out a Schedule C to tally up the income earned and if any deductible
expenses. There will also be a need to file a Schedule SE, which accounts for
Social Security and Medicare payments.

Independent contractors can have the experience of perfect
tax preparation software as provided by IRS certified tax partner http://www.Etax1099.com for e-fling needs of
IRS form 1099-MISC.